API to EPA: Tier 3 so controversial it requires rulemaking process

The American Petroleum Institute urged the US Environmental Protection Agency to use a full Clean Air Act rulemaking process for its proposed Tier 3 rule instead of a rushed review process API says the agency is contemplating.

The proposal to reduce gasoline sulfur limits and tailpipe emissions further is so controversial that it requires publication in the Federal Register, a comment period, and a properly scheduled public hearing, API Senior Downstream Policy Advisor Patrick Kelley told reporters in a May 7 teleconference.

“Respecting the statutory rulemaking process in this case is particularly important because the proposal is hard to justify and potentially very harmful,” he maintained. “The massive refinery investments it would require could drive up the cost of making gasoline and weaken the nation’s energy security without producing much, if any, environmental benefit.”

Kelly said, “Most sulfur in gasoline has already been removed. There’s 90% less in gasoline today than a decade ago, and the current Tier 2 standards are still generating environmental benefits as the US vehicle fleet turns over.”

The proposal is not the only one EPA is considering that could have a negative impact on US refining, he indicated. The agency also is considering gasoline vapor pressure reductions, which could increase costs 16¢/gal beyond Tier 3 costs, according to Kelly. He said it is also contemplating increasingly burdensome federal Renewable Fuel Standard requirements, which, according to NERA Economic Consulting, could increase gasoline costs by 30% and result in rationing and other serious disruptions.

“On top of that, other regulations affecting refineries—rules whose costs have not yet been fully analyzed—could add substantially to this burden,” he declared. “They include greenhouse gas rules, new source performance standards, and more stringent ozone standards. As the studies show, this is a recipe for disaster for American consumers.”

Kelly said the White House’s Office of Management and Budget has urged federal agencies to take the costs of cumulative regulations into account. “If ever there was a moment for EPA to take this advice to heart, it is now,” he said.